StoxPlus is pleased to introduce Vietnam M&A 2018 Research Report, the eighth issue of this report. This report presents the extensive data mining of M&A deals in Vietnam in the reviewed period, as well as analysis by key investors and industries where we recognize potential investment opportunities in the near future. This report also reviewed latest status of SOE IPOs and divestments, and Banks Restructuring in Vietnam

The research provides latest information on market activities as well as competition landscape of M&A in Vietnam. Particularly, for this issue, we focus on analyzing three main segments of M&A categories including (i) Inbound M&A, which is when a foreign company merges with or acquires a domestic company) (ii) Domestic M&A, which is when two domestic companies merge with or acquire other (iii) Outbound, which is when a domestic company merges with or acquires a foreign company. Key financial figures on reviewed transactions are also included in the Appendices.

Below are the most critical findings in our issue:

1. New record high was set in Vietnam M&A 2017 with total deals value of US$13.38bn thanks to a number of “mega” deals valuing over US$100mn. 2017 M&A activities set new record high 32% increasing deal value compared to the previous year 2016 even despite lower deal number (262 deals in 2017 compared to 307 deals in 2016). Fueled by growth of 2017, M&A activities in 1H2018 continued its upward trend. Particularly, total 1H2018 M&A deal value recorded at US$3.76bn which is slightly 4% increase from US$3.59n in 1H2017.
2. Consumer-based sector recorded deals with highest value. In 2017, most active M&A sectors are: Food & Beverage (US$6.32bn ~ 35 deals), Real Estate (US$3.46bn ~ 41 deals) Industrial Goods & Service (US$795mn ~ 32 deals), and Construction & Materials (US$655mn ~ 20 deals). In 1H2018, most active M&A sectors are: Real Estate (US$1.95bn ~ 17 deals), Banks (US$742mn ~ 17 deals), Financial Services (US297mn ~ 9 deals) and Personal & Household Goods (US142mn ~ 8 deals)
3. Inbound M&A accelerated fast during 2017-1H2018. The constantly changing economic environment of Vietnam had provided numerous opportunities for foreign investors. In fact, inbound M&A made up US$11.79bn, equivalent to 87.9% of total M&A deal value in 2017, and US$2.83, equivalent to 75.3% of the value in 1H2018. The shift in inbound M&A in 2017 – 1H2018 were the mega deals.
4. Most aggressive foreign investors are from Thailand, Singapore, and the U.S. Thailand scored the biggest M&A deal of the year through the acquisition of SABECO by ThaiBev at US$4.7bn. Notable deals from Singaporean investors are the acquisition of Vinamilk by Jardine C&C at US$1.2bn, Vinhomes by GIC Pte Ltd at US$1.3bn. Notable deals from American investors are the acquisition of Techcombank by Warburg Pincus at US$370mn, Serenity Holdings by Warburg Pincus & VinaCapital at US300mn, Asia Commercial Bank by Este Investments at US$152mn.
5. Domestic M&A activities have been declining since 2016. Nevertheless, year 2017 and 1H2018 saw an increasing number of mega deals. Deal value and volume of 2017 from domestic M&A decreased in terms of absolute value with US$1.55bn from 61 deals. The most active sectors for domestic M&A in 2017- 1H2018 were Real Estate and Food & Beverage. For two consecutive years, Real Estate topped chart as the most active sector in domestic M&A market. Particularly, Real Estate deals made up 64% of total domestic M&A activities in 2017, and 41% in 1H2018
6. Outbound M&A by Vietnamese companies were quiet in 2016 & 1H2017. M&A across the borders by Vietnamese firms were still very insignificant compared to domestic and inbound M&A during 2017 – 1H2018. Domestic firms had not been actively expanding overseas through M&A. Outbound M&A usually accounted for less than 1% of total M&A. The review period 2017-1H2018 only saw 1 deal valuing US$11mn, which was the acquisition of Angkor Milk (Cambodia) by Vinamilk.
7. SOE IPOs in 2017-1H2018 were modest in terms of volume. There were only 21 and 16 SOE IPOs in 2017 and 1H2018 respectively. The progress of IPOs during 2016 to 2018 was also significantly less aggressive than in the previous period since 2012 to 2015. Nevertheless, the government of Vietnam’s SOE divestment schedule by 2020 promised opportunities for future M&A.
8. Foreign investors are particularly interested in Vietnam’s Financial Services sector, given its tremendous untapped retail potentials and Vietnam government’s Banks Restructuring incentive. During 2017-1H2018, several local banks and credit institutions in Vietnam found investors from across borders via both financial investments as well as strategic investments. Consumer finance received the most attention thanks to its strong growth in recent years, with a few leading consumer finance companies already established its market share. Looking forward, M&A in consumer finance is expected to escalate in both size and number since M&A is the quickest way to penetrate the country’s growing consumer finance market